Energy
Public utilities: rates: changes to federal law
California regulators must review all new federal laws for tax effects on utility rates and revise rates when those effects are material.
Federal tax-law changes can alter utilities’ costs and tax liabilities that are built into customer rates. The law requires those rate assumptions to be revisited when federal legislation materially changes them.
What the law does
- Requires the California Public Utilities Commission to evaluate the full effect of every federal law, including specified federal tax laws, on regulated utilities’ federal-tax expenses and liabilities.
- Requires the commission to adjust a utility’s rates when a federal-law change materially affects tax expenses or liabilities included in commission-authorized rates.
- Allows the commission to use appropriate tracking and rate-adjustment tools and to spread impacts over the period it finds most reasonably allocates them.
- Applies only to utilities whose rates the commission sets and whose revenue requirements were based on tax rates in effect when those rates were established.
Who it affects
- Public utilities regulated by the California Public Utilities Commission.
- Utility customers whose rates include projected federal-tax costs.